Covid's jet card canary in the coal mine, Velocity Jets, is still singing

As demand for private jet travel roared to record levels in July 2021, Private Jet Card Comparisons surveyed subscribers to ask about service letdowns, delays, and other issues. Patrick Harris, President of Velocity Jets, contacted us after one of his jet card customers received our survey. He wanted to know what we were seeing. When we reversed the question, Harris told us he had put sales of his guaranteed availability fixed-rate jet card to new customers on a 30-day hiatus. While NetJets had suspended sales of its Classic jet card, which came with a 10-hour callout in June, Velocity Jets became the first jet card seller to announce it had stopped taking new customers. The pause lasted over six months, and after briefly opening sales again in January 2022, the Boca Raton-based shop shut off the spigot of new customers until March 2023. With under 20 jet card customers – the same as before Covid, no investors or shareholders, and without aspirations to grow exponentially, Harris was one of the industry’s earliest voices to figure out that sometimes record levels of business might not be good for business. We recently sat down with Harris, who founded Velocity Jets in 2007, to get his take on the record surge, how business is these days, the potential impacts of a major private jet operator failure, and the future of jet cards.

Velocity Jets, Covid & Jet Cards

You were on the front lines with the surge of private jet travel, which started at the end of 2020 with the CARES Act and FET-free jet cards. When did you begin to think it was problematic?

Harris: March 2021 is when it really got crazy. I was scared. I’m not going to lie to you. I was like, ‘That’s it. I can’t do this anymore. We’re not doing it.’ People are like, ‘Take my money.’ I’m like, ‘No, we’re not doing it. This is how problems start.’

What does crazy mean?

Harris: More people wanted to fly than there were airplanes available. New people who hadn’t done it before were coming into this. Then the current people that were in it wanted to do it even more than they were doing it because they were really scared about going to the airport. In addition to that, instead of the big guy flying all over, he would fly his family in to see him because he’s like, ‘I’m 65. I’m not going anywhere. They’re coming to see me.’ He would start flying his grandkids and his nieces and nephews. They were using it more than they were before.

In 2020 and 2021, you suddenly got all these calls from new people?

Harris: They were saying, ‘We’ll wire you money. We want to wire money now. We’re ready to sign up. We need to do something.’ I’m telling them, ‘I’m sorry. I’ll be putting myself in a bind by taking more clients,’ and they are getting upset with me.

Did you take some clients before shutting down your jet card?

Harris: No.

You had a bad feeling?

Harris: I started saying this is not normal, and it’s not organic. This is not normal because I know what’s normal for me. I don’t usually get four people a day saying, ‘I want to sign up for your jet card.’ That’s not normal. I thought, ‘This could be the kiss of death if I do it wrong.’

At that point, were you already having trouble sourcing flights?

Harris: Oh, absolutely. If I made one phone call, I made 20 calls for one flight. Then, if that flight had a problem, which half of them did at that time, between a pilot getting Covid, you name it, we had every curve ball you could imagine. Just anything and everything. It became impossible to do your job. That’s when I said, ‘There’s no way I’m taking new clients right now.’ I would have been lying to people (that I could fulfill the jet card contract). I decided, ‘We’re putting it on ice.’

Did you ever worry that maybe you made the wrong move by stopping?

Harris: I will tell you the truth. There were times when I was kicking myself. Sometimes, the good guy doesn’t finish first. Sometimes, the good guy finishes last because all these other companies were taking on new clients and gaining traction, and I was sitting here dead in the water. It was right for me because the industry couldn’t service the number of people who wanted to get serviced. All you could do was tarnish your name because you wouldn’t be able to do what you promised you would do. What are you trying to do? I didn’t want to turn into a big company at the time. I don’t care about that. I just wanted to be a good company that people liked and wanted to do business with.

NetJets was the first major player—in August 2021—to put its entire jet card on hiatus. Were you surprised?

Harris: I was surprised it took them as long as it did.

We discussed all the challenges for operations and cancellations during Covid. Is it better now? Has it gotten better for the operators? Is it still a challenging environment?

Harris: It’s still difficult because the situation is still the same. Now, there’s just more people. It just makes it really, really challenging when more than one thing goes wrong. Now, you’re dealing with a lot more people. If you have a big fleet, you have your hands full.

On-demand private aviation is complicated. Before Covid, was it also difficult?

Harris: It was difficult, but not as difficult just because there are more people now. When you take an airplane out of service, and all these people behind it want to use it, it creates a big problem.

Are there still delays in fixing airplanes due to supply chain issues, keeping them out of service longer?

Harris: Not so much anymore, but during Covid, all the problems, getting parts and planes sitting, you name it. We had every single problem you could have, but we’re out of that, in my opinion.

FlyExclusive, in its most recent earnings call, said older aircraft that it is selling had a 30% dispatch rate because, in large part, they break more often, and it’s harder to get parts for out-of-production aircraft types. Do you think a current challenge is that the charter fleet has gotten older, and it’s harder to keep these older planes in the air?

Harris: A lot of the fleets now are newer. (CEO) Jim (Segrave) is investing in newer aircraft, and I don’t use the older airplanes. I use five-year-old or newer airplanes, so that’s not an issue for me.

As part of your jet card program, what criteria do you use to select operators?

Harris: We’re trying to find airplanes under five years older or newer, Argus Platinum. That’s really it. I want newer airplanes, and I want the highest safety. They’re the two non-negotiable things.

The rub on jet cards is that once you’ve received someone’s money, you must provide flights at a fixed rate. Then, it becomes an arbitrage where you’re just trying to buy the flights at the lowest price. How would you answer that?

Harris: We can’t do it that way. That’s the wrong way to do it. That’s the problem. You’ll lose your clients because that’s not what they signed up for, and that’s not what they want. You either A didn’t price it correctly, or B didn’t explain it correctly. That’s not how it works. Somebody coming from NetJets wants a certain way. Nearly 100% of my client base was with NetJets at some point. They want what they want. They know what things cost. You don’t have any room to deviate from that, but it shouldn’t be a problem if you sell it correctly and explain it correctly. That’s what we’re doing. I don’t have issues where we need to go and get an old airplane. I’m not doing that.

Would it be more challenging if you had scaled up?

Harris: I wouldn’t scale up. I don’t want to scale up. I’m not trying to get bigger. We will stay the course and do it the way we do it. We’re using newer airplanes, nicer airplanes, and Argus Platinum. That’s that. They cost more. They do, and that’s why I’m using that operator.

How was 2024 in terms of a year for business?

Harris: It was good. It was fine. All my clients are good people, and I only lost one, who unfortunately passed away. Thank goodness I have 100% retention.

Were they flying at the same level?

Harris: Oh, yes. September to November was an interesting year because of hurricanes, the election, and all sorts of things. People were on the fence. Now, suddenly, it’s been like a firehose again. Just overnight, around Thanksgiving, it started getting crazy again.

The financial stability of some of the bigger operators has been in the news for the past two years. Although business has been up, some are losing money, at least on a net basis, although some point to EBITDA profits. Would it impact brokers like you if one or more of them failed?

Harris: It would impact us significantly. If one of these big floating fleets suddenly goes offline, that really hurts our pool of airplanes and availability because they’re all on a (Part) 135 certificate. They can’t just suddenly switch aircraft from one certificate to another certificate overnight. It doesn’t work that way. It’s plain and simple. If a bunch of airplanes go offline, that impacts availability, particularly in peak periods, and cost.

As a small broker without brand awareness, are you worried that a big player’s failure would make it harder for you to sell jet cards?

Harris:  My advice (to prospects) is to start small with somebody, real small, grow into it, and build a trusting relationship, friendship, or whatever. Start small always. I tell everybody who starts with me that. I tell them, ‘You don’t even have to really buy a card yet. I’d like you to try us out. Try the first flight, the second flight, get comfortable.’

Some people say if there are failures, that will be the end of jet cards. What’s your feeling about that?

Harris: Jet cards are not going to go away. They’re a part of the industry now, and they’re a segment of the industry because not everybody wants to charter (flight-by-flight), not everybody wants to own, and not everybody needs a fraction. There’s a spot for everybody. If you own an airplane, you need a jet card to supplement your airplane because when that thing goes down for scheduled or unscheduled maintenance, you need a backup. Your business doesn’t stop because your airplane is in the hangar. You need another airplane. That’s where the jet card comes into play. If you’ve got two guys that need to go to Dallas from different places, you need a light jet for one trip and a large cabin jet for another, again, that’s why you have a jet card. Many cards allow multiple users on the same day and many cards don’t lock you into any one class of airplanes. That’s the beauty of jet cards; your price and availability are guaranteed. You don’t have to shop every trip. You don’t have requotes. It’s not about getting a lower price. It’s about making flying easy.

We know having separate accounts for jet card funds doesn’t mean anything because the company can tap into those funds if it needs to make payroll. Some folks believe all jet card deposits should be escrowed, but companies that offer them say consumers don’t want it. What’s your take? 

Harris: Escrow slows everybody down. People buy jet cards so they can call and book without back-and-force. (Escrow accounts) just adds to the time, and it adds to the cost.

Many jet card sellers are rolling back their peak days. For this year, you’ve decided to keep your peak days static and on the high side compared to other programs. 

Harris: You know why? Because it’s hard to tell what’s going to happen. I don’t want to put more peak days than I need. We don’t charge a surcharge. Last year was a bust. All those peak travel days weren’t peak. Most of the time, there was no problem getting the type of airplanes we wanted. Then, other days, it was virtually impossible. I was, ‘This is a tough one to figure out.’ I’d rather have too many peak days so everyone can plan ahead. We have two-hour minimums on light and midsize jets. When we get calls from people making many short flights, I tell them, ‘We’re probably not the place for you.’ Too many people try to be everything to everyone. 

You are not looking to grow exponentially. You’re only looking to add one or two new clients a year. So, you’re not in the same competitive position as many jet card companies or on-demand brokers and operators. What jet card sellers do you think are doing a good job?

Harris: Many companies (selling jet cards) are doing a good job because it’s hard. Our business is hard. Everybody is up against everything. We’re all up against the same challenges. If you go on LinkedIn, some people in the industry like to bash big companies and tell us how bad they’re doing. I’m like, ‘I would like to see you try to buy all these airplanes, then go over here and get all these people to help pay for them and then put them out to work with all the public and make it all work.’ What we do is a very tricky proposition. The big companies do a good job. In all honesty, they do a damn good job. It’s hard, folks. I do on a small scale what Wheels Up does or NetJets, Flexjet, or anybody. I just do it on this scale. I’m always like. It’s a big gorilla. That’s all.

Editor’s Note: The interview was edited for brevity.